What can today’s economists learn from the 18th century Scottish thinkers who grappled with societal and economic change?

“Reawakening” is the theme of the Institute for New Economic Thinking (INET) conference opening in Edinburgh on October 21. The reference, of course, is to the Scottish Enlightenment of the 18th Century which gave birth to modern economics. But beyond a mere nod to the past, the title of the conference prompts an important question for modern economists: Is there something to learn from the Scottish Enlightenment that can help illuminate the predicaments of today – and if so, what is it?

The Scottish Enlightenment is most associated with two names: David Hume and Adam Smith. But they were not isolated thinkers. The skeptical philosopher and the father of economics formed the kernel of an intellectual clique, centered in Edinburgh, that included, among others, Lord Kames, Adam Ferguson and James Millar. Although not all these names are equally well known today, all contributed significantly to the development of modern ideas about the economy.

The philosophers of the Scottish Enlightenment gravitated around several major themes: the origins of morals, the progress of civilization, economic development and the impact of trade. Although their pronouncements were universal, the questions they chose were informed by parochial concerns relating to Scotland, and the tremendous societal changes the country was undergoing at the time.

The trauma Scotland underwent in the 18th century should be familiar to observers and critics of modern globalization. The 1707 Act of Union thrust poor, stagnant, semi-feudal, agrarian Scotland into a merger with rich, dynamic, capitalist, commercial England. Prior to the act, the two countries had practically no economic or trade relations. But after 1707, Scotland not only opened itself up to foreign economic winds, it also lost control of any policy tools that could direct them. It was perhaps the first globalization experiment, at least on such a scale.

Scots were naturally apprehensive. Would Scotland become rich, like England, or descend into pauperism, like Ireland? Would its society become riven by deep divisions and class conflict such as that found in England? Would Scottish lairds forget their traditional paternalistic obligations towards peasants, and become as aloof, cruel and grasping as English landlords? And what would happen to traditional religion and morals?

By the time of the Scottish Enlightenment, the Presbyterian Kirk (the people’s church) had long been the democratic guarantor in Scotland. Its inquisitorial grip on Scottish society may have been tyrannical and sometimes excessive, but it had kept the ruling classes in check. Although one may smirk at the suggestion that Scotland enjoyed a degree of relative equality and class harmony before 1707, it was closer to the truth here than elsewhere, at least on the surface.

Change was not long in coming after 1707. Given access to English trade and colonies, Glasgow’s merchants soon cornered the American tobacco trade and amassed incredible fortunes. With the typical impertinence of nouveau riche anywhere, the rising Glaswegian merchant class imported very un-Calvinistic fashions from England – fancy clothes, balls, theater and ostentatious palaces – and were soon imitated by the rest of the Scottish upper classes. Inequality had not only arrived in Scotland, it had made itself highly conspicuous.

The once-sleepy towns of Glasgow and Edinburgh sprung to life as new commercial cities. The Presbyterian Kirk relaxed its grip, giving up some of its fire-and-brimstone severity for a modicum of latitude. English-style capitalism crept into the Scottish countryside as well – lairds began introducing agricultural innovations on their land to raise productivity and rents, “improvements” that usually involved the evictions of peasants and breaking long-standing norms of tenancy. Scottish society was gradually losing its traditional features and resembling England more and more every day.

For many Scottish supporters of the union – known as the “Whigs” – all this was welcome. They embraced the new commercial society unfolding before them and relished the imported English habits and new capitalist ethos. Indeed, many stopped identifying themselves as “Scottish” altogether and took up a new moniker – “North Britons” (although it never quite caught on).

But this new world was far from secure, and could all be reversed overnight. Up in the Highlands were Gaelic-speaking barbarous clans, ready to rally to arms at the summons of their chief. In 1690, 1715 and 1745, Highlander armies came pouring down and nearly overran the country. Jacobites, loyal to the cause of restoring the Catholic Stuart lineage to the throne, promised to overturn the union and drag Scotland back to where it was before. Although few Lowlanders sympathized with the insane lost cause of the Jacobites, many of those disturbed by the changes foisted upon Scotland contemplated attaching their cart to it.

Today, globalization makes for strange bedfellows. It is presumptuous to assume that reason, commerce and progress glides ever forward and cannot be reversed. For all the enlightened chatter in the clubs and societies of cosmopolitan cities, there are barbarians perched in the hills ready to smash it all. And it is tempting for the losers in the progress of civilization – the dispossessed, disgruntled and forgotten – to lend their support to destructive trouble-makers, no matter how ridiculous their cause might be.

It is a mistake to dismiss reactions against globalization as a romantic hankering for rustic poverty and fanaticism. There were long-standing social contracts – between rich and poor, lairds and peasants, Kirk and people – that had maintained some sort of harmony in Scottish society. These contracts that were broken in the rush to embrace the commercial age. If the gains from trade were to be preserved, the disruption in social relations needed to be repaired. But in order to be repaired, they must first be understood.

This was the task the Scottish Enlightenment thinkers took up: to understand change, and more specifically to understand how economic change affects society. That is something modern economics would do well to learn from: adopting an approach that is more respectful of historical, social and institutional contexts.

The Scottish thinkers had a dynamic rather than static vision of economy and society. While modern economics seems enamored with mechanical systems, and assumes they will settle into some natural equilibrium, the Scottish philosophers had a more evolutionary outlook, in which economic and social forces do not settle, but rather continue changing. They were not very interested in abstract contemplations about natural society, but rather in a realistic understanding the concrete origins of actual society.

Scottish Enlightenment thinkers tried to explain how economic and social relations actually emerged and changed – through the slow march of history, and in their institutional context – rather than imagine they sprang fully-formed out of some mythical state of nature. While they had strong ideas about economic policy, they did not believe in ideal constitutions. As “Whigs,” most of the Scottish philosophers largely welcomed the union and the new commercial age, but they were simultaneously wary of its consequences and downright pessimistic that it could be smoothly handled by governing elites. They understood that there was much of value in traditional society that was being lost, that discontent could breed revolt and that the road to liberty might end up in tyranny.

We’d be wise to consider their approach – and learn from it – in our modern context, and in our practice of economics today.

29 comments

…or not; one of those “Scottish economists” barely got out of France alive, ala French Revolution….he had convinced Louis XVI to end “tax system”, in lieu of “free market capitalism”: “Citizens: A Chronical of the French Revolution”, Schama…

Gordon Brown,that very odd character, was the last person to introduce himself as from ‘north britain’ though this was for american colour television.
I think the figures mentioned would have little sympathy with their current namesakes in the adam smith/david hume ‘institutes’

And of course right on the heels of the Scottish Enlightenment came the sort of romantic antiquarianism associated with Sir Walter Scott’s Waverly novels and the fad for kilts (formerly considered the height of barbarism outside the Highlands). Back and forth we go.

I’m afraid that this article reflects more acquaintance with Scottish “Enlightenment” economic thinkers than it does with their context in Scottish history.

Lowland Scotland created itself–in distinction to Gaelic Scotland–as an originally colonial, manor-based, rent-based society with a distinctive market emphasis. Scottish Calvinism (Presbyterianism) might be seen as the theological and cultural expression of this individualistic contractual society, and neither would tolerate dissent or difference. Both organized themselves in distinction and horrified opposition to the mainly non-contractual kin-based society of the (Gaelic) Highlands in which markets were almost wholly subsumed in social and cultural purposes. The Church had nothing against noble and merchant accumulation of wealth, as long as it expressed itself within Calvinist cultural norms. Scottish “Enlightenment” thinkers arose in this context, in response to questions of how to conceptualize and organize a society that had already been broken down to an individual level, to a good extent, by market and Calvinist theological individualism.
The Jacobite cause was only insane to commercializing farmers, merchants and bankers. The “Highland armies” were one aspect of an uprising that always had a Lowland component and the army of 1745 was about one-third Lowlanders of the growing dispossessed social groups.

I wish contemporary economists and all scholars would stop rummaging in the past for bits of likely-looking flashy material for their current commentarial purposes, at least material they don’t have a context for understanding.

Yes, many thanks. As someone from the other side of Dal Riada (“C’mon lads, I know an even rainier Place!”) I confess I bristled at the author’s term “barbarous clans”. Even though that’s how the Lallans portrayed them, he does not make it sound like he’s only voicing their point of view. The clans weren’t exactly egalitarian but with common land ownership and tanaistry it was less hierarchical in some ways. I’m curious since I’m speaking from the Irish side and without the same level of knowledge of Scots clan life, did they follow, and possibly still have vestiges of Brehon Law? My next research project….

From my understanding of Adam Smith I recall he was as interested in “Moral Philosophy” as economics. His motivation for writing the two great tomes, “A theory of Moral Sentiments” followed by “The Wealth of Nations” was to justify an economic order that could help create a society that would provide the “good life”. As an enlightenment philosopher, follower/friend of Hume, probably a deist/atheist and definitely no Presbyterian he sought a non-scripture based solution. Hence, he gave us the “market” as his answer.

In our traditional conditioning God is the source of luck, good and bad. It revealed
your score under the celestial constant appraisal system – elevate society – good;
look after yourself – bad, so we supposed.

Then quantum theorists discovered a postulate concerning the unmeasured particle
in the reality underlying this universe. It has not been verified experimentally so you can fault it but the intuition of many physicists about the universe upholds it.

The postulate says all unmeasured particles are identical in being but differ in
behavior due to quantum randomness. The essence of quantum randomness
is that identical physical situations give rise to different outcomes. Does that sound a bit like the cause of luck to you?

So, if we are seeking for a new belief on which to found our society, it would seem that Heisenberg and Bohr and Dirac and Feynmann and Einstein have provide one

This was also the time period in which many Scots went from Scotland to plantations in Ireland, especially Ulster, and from there to America (all of the colonies, including Canada). The Enlightenment period in Scotland and Ireland must have exerted a lot of “push” that complemented the propaganda “pull” of the settlement promoters.

In 1690, 1715 and 1745, Highlander armies came pouring down and nearly overran the country. Jacobites, loyal to the cause of restoring the Catholic Stuart lineage to the throne, promised to overturn the union and drag Scotland back to where it was before.

The highland clearances, after 1745, had a significant bearing on Scots’ emigration.

The ‘enlightenment’ of Scotland’s finances from the dreadful Darien Scheme played a huge role in them joining the United Kingdom in 1707…

The Scottish shilling was downwards valued @ 1/12th of it’s prior value, to a penny.
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“The failure of the Darien colonisation project has been cited as one of the motivations for the 1707 Acts of Union. According to this argument, the Scottish establishment (landed aristocracy and mercantile elites) considered that their best chance of being part of a major power would be to share the benefits of England’s international trade and the growth of the English overseas possessions, so its future would have to lie in unity with England. Furthermore, Scotland’s nobles were almost bankrupted by the Darien fiasco.

Some Scottish nobility petitioned Westminster to wipe out the Scottish national debt and stabilize the currency. Although the first request was not met, the second was and the Scottish shilling was given the fixed value of an English penny. Personal Scottish financial interests were also involved. Scottish commissioners had invested heavily in the Darien project and they believed that they would receive compensation for their losses. The 1707 Acts of Union, Article 15, granted £398,085 10s sterling to Scotland to offset future liability towards the English national debt.”

I didn’t know any of this, thanks Wukchumni! As Huguenots proved a century earlier when they tried to colonize what’s now Jacksonville, the Spaniards would have gotten around to massacring the heretic Scot “Lutherans” eventually.

History in the western world is all about following the money trail, and a lot of times it goes cold. The Darien Scheme is little known now, but it’s investment results impoverished Scotland so much they forsook their independence, in a gamble on a piece of land so scarcely coveted now, it’s all jungle 400+ years later, virtually uninhabited.

I am watching “Outlander” and “Poldark” right now. I really like both. This post and comments add interesting background. If for no other reason, it dispenses with today’s propaganda and reflects back two centuries ago on how industrialization, monopolization, inequality and globalization upended the world. Today as then; “It was the best of times, it was the worst of times….”.

And the Scottish reformation (c. 1550- 1570, following on the disolution of the monastaries in England 1536-1541) which ‘distributed’ the accumulated capital of the former Catholic church into new hands also plays a significant precursory role to the “enlightenment”, and interestingly introduces the creation of one of the first of nationwide educational schemes in the world in the 1600’s as the Reformation became institutionalised:

“The Scottish Reformation resulted in major changes to the organisation and nature of education, with the loss of choir schools and the expansion of parish schools, along with the reform and expansion of the Universities. In the seventeenth century, legislation enforced the creation and funding of schools in every parish, often overseen by presbyteries of the local kirk. The existence of this network of schools later led to the growth of the “democratic myth” that poor boys had been able to use this system of education to rise to the top of Scottish society. However, Scotland’s University system did help to make it one of the major contributors to the Enlightenment in the 18th century, producing major figures such as David Hume and Adam Smith.”

The question that begs: why was education brought to the masses during this period

The Scottish Reformation is a fascinating subject…it’s funny how it played out in the future…for example:

“The revolution of 1688, which brought William and Mary to the throne, gave England political stability for the first time in nearly a century.

Businesses flourished, but the public finances were weak and the system of money and credit was in disarray. The goldsmith bankers, who had begun to develop the basic principles of banks as deposit-takers and lenders, had been damaged by the lax financial management of the Stuart kings.

There were calls for a national or public bank to mobilise the nation’s resources, largely inspired by the Dutch example of the Amsterdam Wisselbank. Many schemes were proposed. The successful one, from Scottish entrepreneur William Paterson, invited the public to invest in a new project. The public subscriptions raised £1.2 million in a few weeks, which formed the initial capital stock of the Bank of England and was lent to Government in return for a Royal Charter. The Royal Charter was sealed on 27 July 1694, and the Bank started its role as the Government’s banker and debt manager.”

“The question that begs: why was education brought to the masses during this period”

I have to say, considering the quality of comment above, it to be the most vexing whilst enduring question on offer, kudos.

I can only surmise, not unlike past introspection here at NC, say on the plight of the Spartans, that some sociological templates have a half life baked in. So whilst – they – in their – context – to the enviroment [food production] and other regional aspects [forced to be reckoned with] enjoyed a period of positive reinforcement wrt their sociological template.

The drama it seems is the propensity to enslave others for menial tasks [food production et al] and the culling of those that did not fit the prescribed notion of a Spartan. In the end they basically offed themselves both intellectually and biologically. Echos of winegrowers laborers and masters off on a holiday.

So back to your question, I would offer that even in antiquity the elites understood when the pool became corrupted and needed new blood. This was facilitated by either direct blood injections or education or a combination of the two.

I think China is a good example because of its earlier cycles in retrospect to Western culture, which is curious considering recent events.

disheveled… all shades of Toynbee methinks… where education is a two edged sword, it can facilitate the elites agenda, but at the same time enables the undoing of its power over the unwashed [awakening].

Thanks for the reply which acts as a repast and might lead, if one was so inclined, to a banquet.

As to your last point re: Toynbee. It is the relative speed with which a certain package of “information” can be delivered to the masses to be digested as truth as it is handed from above versus the seriously slow time it takes to decode the informational message against the drip, drip of existential experience. As the contradictions begin to swamp us it seems we tend to dig in deeper rather than seek higher ground. But we must to higher ground survivors make. How do the scales balance? slow struggle to the height and quick tumble down? or slow march around and around sometimes seeing heaven but more often than not ending up in hell? Will we ever enlighten our burdens?

The question that begs: why was education brought to the masses during this period

Arthur Herman, in How the Scots Invented the Modern World suggests that education was promoted for the singular purpose of developing the new Protestantism. Specifically, since the Protestants believed that each individual should be able to read the bible, literacy had to be improved for this Protestant ideal to have any meaning for the masses. According to Herman, the promoters of universal education expected the young people to read the bible, but once given the gift of literacy, other ideas became accessible and a great struggle ensued for thought control, including book banning and imprisonment of young skeptics who found the bible not to their liking.